Geothermal energy–arguably the most underrated form of renewable energy. It seems like such a big part of the solution to net zero. We're sitting on a massive pile of heat, so why can't we use it more? Before we dive into the topic of insufficient funding for this technology, let's start with the fundamentals.

What is geothermal energy?

Looking for an energy source that emits (virtually) no GHGs? Geothermal. A source available 24/7 in any season? Geothermal. A source that is not radioactive? Geothermal. A source that can work (with some digging) anywhere on earth? Geothermal.

You are probably familiar with the concept that geothermal energy derives from the Earth's heat, residing below its surface. We can utilize it to make electricity and heat with very low GHG emissions. But how deep you have to dig to get to that heat, differs depending on where on earth you are.

Traditional geothermal, known as hydrothermal, is quite close to the surface but limited to specific locations such as the geysers in Iceland. More often you must dig miles deep. That's a major challenge, but the upside is that many more sites will become suitable for geothermal.

 The basic idea is as follows:

  • Heat from the Earth’s crust creates steam.
  • Steam rotates turbine.
  • Generator produces electricity.
  • Water is injected back into the ground.

Traditional geothermal technologies

There are four main geothermal technologies: dry steam, flash steam, binary cycle power plants, and enhanced geothermal systems. Each with its own characteristics and applications:

  • Dry-steam power plants utilize rare naturally occurring underground steam. The steam powers turbines directly, generating electricity.
  • Flash-steam plants although more expensive, are common. Pumping water hotter than 182°C (360°F) into a low-pressure area rapidly evaporates it into steam. Above the ground, this steam drives turbines for electricity generation.
  • Binary cycle plants plants are even costlier. Hot underground water (107°C to 182°C / 225°F to 360°F) is pumped and circulated above ground, transferring heat to a lower-boiling-point liquid. The liquid generates steam for turbines and electricity production.
  • An enhanced geothermal system (EGS) tap into hot rock with limited fluid and permeability. Injection wells create underground reservoirs, and hot water is pumped to the surface. Similar to the binary cycle plant, a secondary liquid is used to generate steam. In other words: Find naturally occurring heat, bring your own fluid, and create your own permeability. Now that’s scalable.   

Geothermal 2.0

However, prime geothermal conditions are found on less than 10 percent of the planet. Currently, this field is evolving significantly with new technologies that dramatically expand the scope and scale of geothermal energy production. The big challenge? How to dig miles deep, very precisely, through extremely hot rock. And also: how to harvest that energy effectively. 

The next-generation of geothermal energy calls for innovative techniques that might seem straight out of a science fiction narrative. Imagine harnessing the power of lasers or sound waves to heat rocks to the point of melting or vaporization. However, these cutting-edge approaches are yet to be extensively validated on a large scale — and i'm sure you understand that such a thing is expensive.

Two ambitious companies in the field are (1) Quaise Energy, which secured $40 million in Series A funding to dig 20 kilometers (12 miles) deep, approximately twice the depth of the deepest point in the ocean, and (2) Eavor, which raised €34 in a Series B funding to pursue large-scale deployment of their closed-loop technology. And there are more: 👇

Innovations to follow

  • New drilling methods such as spallation, electric pulses, and even lasers like GA Drilling
  • Novel reservoir designs (i.e. how we drill, stimulate, and operate geothermal systems in different geographical circumstances) like Fervo
  • Geothermal resources maps for a detailed understanding of how deep the heat is as well as other subsurface information like Project Innerspace
  • Alternative working fluids to replace water in geothermal systems by other substances like superficial CO2 like Terracoh
  • Tech transfer from oil, gas and coal plants (i.e. what current tools and practices can we adapt to geothermal?) like Transitional Energy

What’s slowing geothermal energy down?

What is hindering the progress of geothermal energy? Currently, its utilization remains constrained, resulting in a mere 0.5% contribution to the overall global renewable energy mix. Here are the disappointing numbers compared to other renewables (from International Renewable Energy Agency (IRENA)):

This raises the question of why we have yet to adopt geothermal on a large scale. To dive deeper into this topic, I highly recommend listening to this episode of Catalyst, one of my favorite climate tech podcasts. I will outline what I believe to be the major challenges. Because our work at Carbon Equity centers on investing in climate technology, I will begin by addressing the key factors of costs and risks.

Firstly, the up-front costs associated with geothermal energy are considerable. Once the system is installed, electricity is cheap. But to build a geothermal system, expensive drilling is necessary. Moreover, this process demands precision. A minor deviation of 20 centimeters in kilometers-deep drilling requires starting the whole process anew. And having to drill a second time can kill a business case.

The costs are interlinked with risk of project failure. The technology required for drilling in much harsher conditions is first of a kind. For instance, drills and electronics must withstand temperatures surpassing 400 degrees Celsius. Combining high up-front costs and high risks, the investment landscape differs significantly from widely recognized technologies like solar and wind power. To upscale geothermal projects, we need to invest in innovation to make it viable and profitable.

Innerspace is an exciting nonprofit focused on doing just this. In a nutshell, Innerspace leverages drilling techniques from the oil & gas industry to develop first-of-a-kind projects in geothermal. It also funds startups to overcome the ‘Valley of Death’. Innerspace’s goal is to make geothermal exponential by 2030. For more information, watch the video below.

However, ultimately, the cost and required technologies may not be the most significant barriers. I think permits and additional sociological dynamics are. 

Limited political attention to geothermal energy hinders its inclusion in transition plans, restricts subsidies, and discourages governments from supporting or even blocking pilot projects.

Why this limited political priority? Politicians have limited knowledge about the technology and its potential, and it is challenging to gain political mileage from it. There is no strong lobby for geothermal energy, although some individuals are now working towards changing that. 

Moreover, drilling is a sensitive topic, and many countries have other "flagship" projects. Torsten Kolind, impact investor and entrepreneur from Denmark, uses Denmark's strong affinity for wind energy to explain this issue. The wind lobby is influential, and residents are familiar with the technology and its benefits. Consequently, other renewable options face skepticism among the Danish population, which is a common barrier in many countries.

Similarly, you can imagine that drilling into the ground is something that citizens don’t have a high appetite for, especially in nations like the Netherlands where past energy extraction (natural gas) has led to earthquakes like in Groningen.

So as a politician, you must be firmly on your side to prefer geothermal to wind turbines and solar farms. To make it even harder, the lack of knowledge about geothermal technology among lawmakers leads to a variety of concerns, such as earthquakes.

Lastly, the geothermal industry suffers from a shortage of human resources. In other words: there are more good ideas than people working on them. For example, the oil and gas industry is 1,000 times larger than the geothermal industry.

Houston, we have a solution

Getting cold feet? Luckily, numerous techniques from the oil and gas industry are useful in the world of geothermal. After all, both fields require drilling deep and harnessing energy. Repurposing only 1% of the oil and gas human capital would grow the geothermal industry by 1000%!

That’s why I find it so interesting to see Houston, Texas, developing as the hotspot for geothermal. Given the prominence of oil and gas in Texas, the government permits drilling in nearly all areas. This is the place where many innovations for next-gen geothermal are getting off (or in) the ground.

Geothermal energy has gigantic potential, but we need to fund the innovations needed to access it at scale, and to create more political momentum. Once the technologies hit sufficient maturity, oil & gas companies are bound to run with it. But for now, startups/ scaleups and investors are critical to push these technologies to more maturity.